Sempra Energy, State of California to Settle Energy Crisis Litigation
28 Abril 2010 - 10:00AM
Marketwired
Sempra Energy (NYSE: SRE) today announced that it has reached an
agreement in principle with the state of California and California
parties to settle substantially all of the remaining litigation
related to the energy crisis of 2000-01.
RBS Sempra Commodities -- Sempra Energy's commodities joint
venture with The Royal Bank of Scotland -- and Sempra Energy expect
to settle the cases for a total of $410 million. Previously
recorded reserves and receivables at RBS Sempra Commodities would
fund the largest portion of the settlement. Sempra Energy has
recorded reserves for the remaining portion of the settlement in
the first quarter of 2010 that will reduce that quarter's earnings
by approximately $96 million after tax, or $0.38 per share.
Under the terms of the settlement, Sempra Energy and RBS Sempra
Commodities continue to disclaim any wrongdoing asserted in the
litigation claims.
"After nearly a decade of litigation with California parties
over issues related to the state's energy crisis, we are pleased to
put these matters behind us," said Donald E. Felsinger, chairman
and chief executive officer of Sempra Energy. "We believe this is a
fair and reasonable outcome for both our shareholders and the state
of California."
Cases resolved include claims against Sempra Commodities in the
Federal Energy Regulatory Commission (FERC) investigation of prices
charged by electric suppliers in energy markets during the 2000-01
crisis (also known as "the FERC Refund Proceedings"); and claims
against Sempra Generation over the validity, pricing and operation
of the company's long-term energy contract with the California
Department of Water Resources.
Sempra Commodities became part of the RBS Sempra Commodities
joint venture in 2008. Sempra Energy and RBS announced earlier this
year that they will exit the business. A definitive agreement to
sell the international oil, metals and European businesses was
signed with J.P. Morgan & Chase Co. in February. An active
sales process is under way to sell the remaining North American
natural gas and power businesses. Sempra Energy expects the sale of
both parts of the joint venture to be completed in the latter half
of 2010.
Sempra Energy's first-quarter results will be negatively
impacted by the reserves for the proposed litigation settlement and
also by break-even operating results at RBS Sempra Commodities,
primarily due to poor performance in international oil marketing.
The company said the performance at Sempra Commodities is not
expected to show significant improvement prior to the completion of
the sales process, because of low commodity prices and the
disruptions caused by the sale.
Sempra Energy said its core utility and infrastructure
businesses are performing in-line with expectations. As discussed
at the company's financial analyst conference last month, Sempra
Energy projected 2010 earnings per share from these core businesses
of $3.50 to $3.75, before the impact of the litigation reserve.
Assuming continued break-even performance at RBS Sempra
Commodities and the $96 million after-tax litigation reserve,
Sempra Energy now expects overall earnings per share of $3.15 to
$3.40 in 2010.
Sempra Energy will announce its first quarter earnings May 4 and
follow up with a conference call with management at 1 p.m. EDT.
The settlement agreement will require FERC approval, which is
expected later this year.
Sempra Energy, based in San Diego, is a Fortune 500 energy
services holding company with 2009 revenues of more than $8
billion. The Sempra Energy companies' 13,800 employees serve more
than 29 million consumers worldwide.
This press release contains statements that are not historical
fact and constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements can be identified by words like "believes," "expects,"
"anticipates," "intends," "plans," "estimates," "may," "would,"
"could," "should," or similar expressions, or discussions of
strategies, plans or intentions. Forward-looking statements are not
guarantees of performance. They involve risks, uncertainties and
assumptions. Future results may differ materially from those
expressed in the forward-looking statements. Forward-looking
statements are necessarily based upon various assumptions involving
judgments with respect to the future and other risks, including,
among others: local, regional, national and international economic,
competitive, political, legislative and regulatory conditions and
developments; actions by the California Public Utilities
Commission, California State Legislature, California Department of
Water Resources, Federal Energy Regulatory Commission, Federal
Reserve Board, and other regulatory and governmental bodies in the
United States and other countries where the company does business;
capital market conditions and inflation, interest and exchange
rates; energy and trading markets, including the timing and extent
of changes and volatility in commodity prices; the availability of
electric power, natural gas and liquefied natural gas; weather
conditions and conservation efforts; war and terrorist attacks;
business, regulatory, environmental and legal decisions and
requirements; the status of deregulation of retail natural gas and
electricity delivery; the timing and success of business
development efforts; the resolution of litigation; and other
uncertainties, all of which are difficult to predict and many of
which are beyond the control of the company. These risks and
uncertainties are further discussed in the reports that Sempra
Energy has filed with the Securities and Exchange Commission. These
reports are available through the EDGAR system without charge at
the SEC's Web site, www.sec.gov and on the company's Web site, at
www.sempra.com.
Sempra Pipelines & Storage, Sempra Generation, Sempra LNG
and RBS Sempra Commodities dba Sempra Energy Solutions and Sempra
Energy Trading are not the same companies as the utility, San Diego
Gas & Electric (SDG&E) or Southern California Gas Company
(SoCalGas), and Sempra Pipelines & Storage, Sempra Generation,
Sempra LNG and RBS Sempra Commodities dba Sempra Energy Solutions
and Sempra Energy Trading are not regulated by the California
Public Utilities Commission.
Media Contact: Doug Kline Sempra Energy (877) 340-8875
dkline@sempra.com www.sempra.com Financial Contact: Glen Donovan
Sempra Energy (877) 736-7727 investor@sempra.com
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